Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wash.: Chamber of Commerce can’t challenge Seattle ordinance under Sherman Act, (Aug 11, 2016)

By Michael Menzhuber, J.D., LL.M.

The federal district court in Seattle dismissed an action by the Chamber of Commerce of the United States to enjoin enforcement of a City of Seattle (CoS) ordinance that provided a mechanism for for-hire drivers to collectively bargain with the companies that hire them in violation of the Sherman Act. The court dismissed the action, finding that the Chamber lacked standing to bring the antitrust claims because Uber Technologies, Inc. and Eastside for Hire—the members that the Chamber sought to represent—did not incur an "injury in fact" sufficient to create standing (Chamber of Commerce of the United States of America v. Seattle, August 9, 2016, Lasnik, R.).

A CoS ordinance, that took effect on January 22, 2016, provided that: (1) unions or other representational groups that were granted qualified driver representative (QDR) status could contact driver coordinators whose drivers it sought to represent in order to obtain contact information; (2) if the majority of these drivers expressed an interest in being represented, the QDR would be certified as the exclusive driver representative (EDR) for all drivers associated with the driving coordinator; and (3) if an EDR was certified, the driving coordinator must meet and negotiate with the EDR regarding, among other things, the nature and amount of payments to drivers and the hours and conditions of work.

The Chamber filed suit against CoS, alleging that the ordinance unlawfully authorized for-hire drivers to engage in per se illegal concerted action by forming a cartel, speaking as a single unit through an exclusive representative, and engaging in horizontal fixing of prices and contractual terms. The ordinance was also preempted by the Sherman Act, the Chamber alleged. As a result, the complaint sought to enjoin enforcement of the ordinance on the grounds that two of its members, Uber Technologies, Inc. and Eastside for Hire, would face a substantial risk of future injury and were suffering present harm as a result of the ordinance. The CoS argued that the Chamber lacked standing to pursue its claims and that the claims were not prudentially ripe.

As an initial matter, the court noted that: (1) "injury in fact" is required to establish standing; (2) an allegation of an injury arising entirely in the future would suffice only if the threatened injury is certainly impending or there is a substantial risk that the harm will occur; and (3) an association, such as the Chamber has standing to bring suit on behalf of its members when, among other things, they have standing to sue in their own right.

Future injury. The Chamber argued that enforcement of the ordinance would injure Uber and Eastside because the disclosure of their driver lists would destroy the value of their intellectual property/trade secrets and impinge on the privacy of the third-party drivers. The court, however, found that this theory of standing relied on a speculative chain of events controlled entirely by the choices of third parties not before the court. Consequently, the court determined that neither Uber nor Eastside had standing to challenge the ordinance at this time.

Present injury. The Chamber argued that Eastside was currently incurring actual, on-going injuries because the ordinance’s anti-retaliation provision precluded it from amending its existing contracts to preclude drivers from providing statements of interest to any QDR seeking to act as an EDR. The court, however, noted that Eastside could have amended its contracts when it first expressed an interest in doing so, which was more than a month prior to the effective date of the ordinance. Eastside, however, failed to do so.

The Chamber also argued that Uber and Eastside were incurring actual, on-going injuries because of the reasonable expenditures they incurred to prepare for operation of the ordinance. The court disagreed because, while it was reasonable for driver coordinators to take measures to prevent or mitigate harm that they might face due to enforcement of the ordinance, the actions taken in reaction to a risk of harm cannot be parlayed into the necessary "certainly impending" injury.

In the absence of either Uber or Eastwood suffering an injury traceable to the ordinance and that would be redressed if the ordinance was invalid or enjoined, the court determined that the Chamber lacked standing. The court further determined that the doctrine of ripeness could not remedy this constitutional deficiency.

The case is No. C16-0322RSL.

Attorneys: Christian G. Vergonis (Jones Day) and Lily Fu Claffee, U.S. Chamber Litigation Center, for Chamber of Commerce of the United States of America. P. Casey Pitts (Altshuler Berzon LLP) for City of Seattle and Seattle Department of Finance and Administrative Services.

Companies: U.S. Chamber of Commerce of the United States of America; City of Seattle

Cases: Antitrust WashingtonNews